Edible Oil Industry Concerned Over Pending Input Tax Credit Refunds

26-Aug-2025 08:53 PM

Mumbai. Solvent Extractors Association of India (C), a leading domestic industry body, has said that the domestic industry is being severely affected due to blocking of refund of more than Rs 300 crore of total cumulative input tax credit under the inverted duty structure for the edible oil industry.

The edible oil industry is operating under a scenario where high GST of 12 or 18 per cent is applicable on input goods and services used in the production and marketing of edible oils.

This includes packaging and any other value addition products. On the other hand, only 5 per cent GST is levied on the goods produced by the industry i.e. edible oils.

This creates an inverted duty structure. As a result, the total cumulative amount of input tax credit of the industry of Rs 300 crore is getting blocked. This has a serious adverse effect on the financial structure of the edible oil industry.

In fact, since July 18, 2022, the ITT refund of edible oil units is not being given, due to which the industry is facing great difficulty and its concern has increased.

High rate GST is applicable on packaging material and low rate on supply of finished products. This is hampering the working capital of the industry and the industry faces difficulty in selling its product at a competitive price.

The association has recently submitted a memorandum in this regard to the Union Minister of Commerce and Industry and the Minister of Food, Consumer Affairs and Public Distribution, in which some special suggestions have been given. A memorandum has also been given to the Union Finance Minister.

It states that the notification related to the Central Tax (Rate) and Restoration of the refund of total cumulative ITT for edible oil processors effective July 18, 2022 should be withdrawn. The GST rate on packaging material for the edible oil industry should be reduced from 12 and 18 percent to 5 percent.